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Who's your daddy?
Just finished my summer macro class (last Friday actually; grades were due Monday). One of the things that always becomes important in the course is how to define the break between Keynes, or at least Keynes and the Old Neoclassical Synthesis, on the one hand, and Friedman and Lucas, in the case of the latter both the New Classical models (monetary misperception) and Real Business Cycle (RBC) models, on the other. Many authors suggest that Lucas should be considered, after Keynes himself, the great scientific revolutionary, and that Friedman's break is incomplete. It is the implicit view in Alessandro Vercelli's book Methodological Foundations of Macroeconomics: Keynes After Lucas or explicitly in the more recent book by Michel De Vroey'sKeynes, Lucas, d'une macroéconomie à l'autre.

The reasons adduced are associated to Friedman's model, which remains in many respects similar to the Neoclassical Synthesis one, that is, an ISLM with a Phil…

"A progressive Europe—the Europe of sustainable growth and social cohesion—would be one thing. The gridlocked, reactionary, petty, and vicious Europe that actually exists is another. It cannot and should not last for very long."

By James K. Galbraith
The full brutality of the European position on Greece emerged last weekend, when Europe’s leaders rejected the Greek surrender document of June 9, and insisted instead on unconditional surrender plus reparations. The new diktat—formally accepted by Greece yesterday—requires 50 billion euros’ worth of “good assets”–which incidentally do not exist—to be transferred to a privatization fund; all financial legislation passed since SYRIZA took control of parliament in January to be rolled back; and the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) to return to Athens. From now on, the Greek government must get approval from these institutions before introducing “relevant” legislatio…

Not yet! The Left should create a popular front against the EU
By Stavros D. Mavroudeas* (Guest blogger)
In the 5th of July 2015 the huge majority of the Greek people (61%) rejected the insolent demands of the EU for the extension and deepening of the austerity and pro-capital restructuring policies in Greece. These demands were codified in the so-called Juncker Plan for Greece that set barbaric terms for the extension of the previous austerity program (the 2nd Economic Adjustment Program for Greece) in exchange for releasing much delayed tranches of the troika loans to Greece. These tranches were urgently needed for repaying instalments of previous loans by the troika. As I have argued in a previous note (‘The Greek referendum and the tasks of the Left’) SYRIZA was led unwillingly to call this referendum because of the failure of its unrealistic program for a ‘decent compromise’ with the EU and for ‘staying in the Eurozone at any cost’. Moreover, the whole affair proved beyond any dou…

The results of the new Greek bailout announced Sunday should not be a surprise. The program requires tax increases, pension cuts, weakening of collective bargaining clauses, and “ambitious” primary surplus targets, which would require € 13 billion in spending cuts, in exchange for € 50 billion to avert default and the collapse of banks. The adjustment program will deepen the already incredibly prolonged and severe collapse of the Greek economy. It implements a draconian fiscal adjustment, that has utterly and visibly failed, and that was overwhelmingly rejected by the Greek people in a referendum last week. In many ways Prime Minister Alexis Tsipras and Syriza had an impossible mandate, to remain in the Eurozone, and to deflect the austerity policies that are the only solution accepted by the Troika – the European Commission, the European Central Bank, and the International Monetary Fund.

Also, the proposed program is not the end of the story. It is unclear that the new agreement woul…

The negotiations on the Treaty of Versailles have so far been disrupted by the attitude of a British negotiator, a certain John Maynard Keynes. He has a flamboyant personality and dubious morals, and has consistently employed an arrogant and professional tone to crush other negotiators with his contempt.

Ignoring the elementary lessons of economics, Mr Keynes has argued that countries running current account surpluses, and which have made significant efforts, are just as responsible as countries running deficits in creating economic imbalances. Moreover, he has asserted that in times of underemployment, the surplus countries should spend more, thereby encouraging prodigality. He has claimed that in periods of economic hardship, public spending should be increased, and has mocked officials who naturally believe that a countr…

The referendum that just took place in Greece in which 61.3% of voters rejected the terms of an international ‘bailout’ package should not be read as a vote in favour of leaving the euro. The ‘No’ vote – όχι in Greek – is, as correctly pointed out by James K. Galbraith, the only hope for Europe. On the other hand, it may very well be used by the Troika – the European Union (EU), the European Central Bank (ECB), and the International Monetary Fund (IMF) – as an instrument for expelling Greece from the monetary union. If that happens, we have a Grexpulsion and not a Grexit, the more common name for the abandonment of the euro. After all, it is very clear that SYRIZA knows that the costs of leaving the euro may very well outweigh the advantages, and that Greece is not Argentina, as noted by its Finance Minister (as it turns ex) Yanis Varoufakis recently.

The relationship between West European powers and the Greek Left has been problematic for a long while. In the aftermath of World War I…

For six months, after its January 2015 election victory, the SYRIZA government began negotiations with the EU. In these negotiations SYRIZA was confronted with the stubborn and increasing intransigence of EU and its companion institutions (the ECB and the IMF). SYRIZA very soon accepted the logic and the structure of the troika program; that is the Economic Adjustment Program for Greece popularly called the Memorandum. It simply tried to modify it by making it less front-loaded (i.e. delaying the implementation of reductions in pensions and hidden wage cuts, reducing fiscal primary surplus targets and thus making fiscal policy less austere). It also asked for facilitating debt servicing (by rolling back debt, leveraging and ‘financial engineering’) and an increase in aid funds (through the fictitious Juncker plan) that would help to jumpstart the moribund after 6 years of austerity Greek economy. Last, it shyly asked for some commitment for a fut…

Mark Weisbrot on why Greeks should vote no.
"Well, I would go for a no-vote, because you have to look at who is responsible for this mess, who is responsible for six years of depression, who is responsible for the bank closing right now.
It’s because the European Central Bank decided last Sunday to limit the amount of emergency liquidity assistance, so that the banks wouldn’t have enough money to open. And they did this very deliberately, I think, to intimidate the voters into voting yes.
Everything that comes out of the mouths of the European officials right now is trying to scare and intimidate people to make them feel this pain and tell them this is what you’re going to get if you vote no. This is what you’re going to get if your government is audacious enough to insist not on everything they want or even half of what they want, but just a deal that allows the Greek economy to recover and unemployment to come down.
That’s really all that they have been asking for. And the …